principles of business, marketing and finance supply and demand in a private enterprise system...
TRANSCRIPT
Principles of Business, Marketing and Finance
Supply and Demand in a Private Enterprise System
Copyright © Texas Education Agency, 2011. All rights reserved
“Copyright and Terms of Service
Copyright © Texas Education Agency. The materials found on this website are copyrighted © and trademarked ™ as the property of the Texas Education Agency and may not be reproduced without the express written permission of the Texas Education Agency, except under the following conditions: 1) Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the
Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from the Texas Education Agency;
2) Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of the Texas Education Agency;
3) Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way;
4) No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged.Private entities or persons located in Texas that are not Texas public school districts or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from the Texas Education Agency and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty fee.
Copyright © Texas Education Agency, 2011. All rights reserved 2
Needs and Wants
Needs
• Needs are essential
Wants
• Wants add to the quality of life
Needs & Wan
ts
• Needs and wants are unlimited
Copyright © Texas Education Agency, 2011. All rights reserved3
Goods and ServicesGoods and Services
• Business– Steel– Plastic– Gasoline– Computers– Electricity– Security– Accounting
Copyright © Texas Education Agency, 2011. All rights reserved4
Goods and ServicesGoods and Services
• Consumers– Watches– Televisions– Cell phones– Vacations– Service at an
automobile dealership
Copyright © Texas Education Agency, 2011. All rights reserved5
U.S. EconomyU.S. Economy
• Largest producer of goods and services in the world.
• Americans consume more than any other country.
• America has twice as many shopping malls as it does high schools.
• Americans use credit to buy now, and pay later.• High level of demand may stem from the
quantity of goods and services available and the amount of money businesses spend to advertise.
Copyright © Texas Education Agency, 2011. All rights reserved6
Economic Resources
• Means through which goods and services are produced – however resources are limited
Natural Human Capital
Copyright © Texas Education Agency, 2011. All rights reserved
7
Basic Economic ProblemBasic Economic Problem
• Scarcity• Choices are based on scarcity• Economic decision making -a process of choosing which wants, among several
options will be satisfied• Trade-off -when you give up something to have something else• Opportunity cost -the value of the next-best alternative that you did not
choose
Copyright © Texas Education Agency, 2011. All rights reserved8
Questions Economies Must AnswerQuestions Economies Must Answer
What goods and services will be produced?
How will the goods and services be produced?
For whom will the goods and services be produced?
Copyright © Texas Education Agency, 2011. All rights reserved9
Economic SystemsEconomic Systems
• Controlled Economy -government makes decisions
• Free Economy (Market Economy)
-consumers influence decisions
• Mixed Economy
-some goods and services are provided by the government and some by private enterprise
Copyright © Texas Education Agency, 2011. All rights reserved10
America’s Private Enterprise Economy
America’s Private Enterprise Economy
• Based upon independent decisions by businesses and consumers with limited government activity to regulate relationships.
• Stimulated by the profit motive.
• Resources of production are owned and controlled by individual producers.
Copyright © Texas Education Agency, 2011. All rights reserved11
America’s Private Enterprise Economy
America’s Private Enterprise Economy
• Individual consumers make decisions about what will be purchased to satisfy needs.
• Value determines what consumers will purchase.• Government stays out of the exchange activities.• Consumers - individuals who purchase products and
services to satisfy needs• Demand - a relationship between the quantity of a
product consumers are willing and able to purchase and the price
• Producers - businesses that use their resources to develop products and services
Copyright © Texas Education Agency, 2011. All rights reserved12
America’s Private Enterprise Economy
America’s Private Enterprise Economy
• Supply-a relationship between the quantity of a product that producers are willing and able to provide and the price
• Government-allows consumers and producers to make decisions without any interference
Copyright © Texas Education Agency, 2011. All rights reserved13
Microeconomics and Consumer Demand
Macroeconomics
Microeconomics
Copyright © Texas Education Agency, 2011. All rights reserved14
Factors Affecting DemandFactors Affecting Demand
• Strength of the need or want• Available supply of products and services to
satisfy needs• Availability of alternative products that
consumers believe will satisfy their needs• Demand Curves
– Relationship between price and the quantity demanded
– Rising prices result in lower demand
• All of the consumers who will purchase a particular product or service
Copyright © Texas Education Agency, 2011. All rights reserved15
Supplying the ProductSupplying the Product
• Possibility of profit• Amount of competition• Capability of developing and marketing products or
services• Economic resources• Supply Curve
– Graphs relationship between price and quantity supplied– Law of Supply-when price of a product goes down, fewer
products will be produced• Market Price -point where supply and demand for a product are equal
Copyright © Texas Education Agency, 2011. All rights reserved16